Independent directors of Indian firms on a quitting spree

Bangalore: In the wake of pressures on independent directors during the Satyam scam, the directors have begun quitting boards in the past four months, citing reasons ranging from ill-health to work pressures. "I have been on five boards of Indian firms in the past eight years. On January 1, 2009, I quit the ACC board and now, I am not on any Indian company board," said Professor Nirmalya Kumar of London Business School.

Directors who have quit the boards include PRS Oberoi of Jet Airways, Prof Nirmalya Kumar of ACC board, Harsh Mariwala of Mirc Electronics, Surinder Kapoor of Greaves Cotton and Infosys co-founder NS Raghavan of Shobha Developers, reports The Economic Times. Many promoters and other dignitaries, who sit on multiple boards, are also restricting their board engagements for fear of their reputations being tarnished or unnecessarily getting embroiled in controversies. "On January 1, 2009, I quit the ACC board and now, I am not on any Indian company board. I like to spend 4-5 years on a board to understand the company and the sector," said Professor Nirmalya Kumar of London Business School.

As per the Bombay Stock Exchange (BSE) website, more than 500 directors have quit the BSE-listed company boards since January 1 this year. The directors normally quit if they are not satisfied with growth and performance of the company and are unable to make any contribution to it. They also leave if meetings held by companies are not transparent enough for them to have enough confidence in the company. Even expats who have been in the boards have begun leaving the boards, like Mark F Dziaga quit the Hexaware board, Adrianus Bernardus Voorn quit Geetanjali Gems and Lip By Tan quit Mindtreee. "Foreign directors are interested in taking the opportunity to steer Indian companies forward, but they would want full liability protection and insurance, which Indian companies are not willing to give," said Namrata Barua, ex- Regional Director-India for the Conference Board, a global think-tank on governance issues.

However, experts witness this exit of independent directors as a good sign for building accountability.